Downpayment Assistance Program

The City of Watsonville now offers a Downpayment Assistance Program (DAP) to help low to above moderate income households purchase their first home. The DAP is operated in the same manner as the City’s First Time Homebuyer Program but may only be used to purchase a deed restricted affordable unit.

Below is some basic information about the Program. A summary of the information may also be found in the Program Guidelines.

Who is Eligible?


Anyone who has not owned or held ownership interest in a home or other real estate within the last three years; and households whose annual projected gross income does not exceed the income limits based on household size for the income category of the unit they wish to purchase.

The current income limits for units restricted through the City’s Affordable Housing Program may be found in Table A-2 here.

Homebuyers must be able to provide at least 3% of the sales price toward the purchase of the home and successfully complete a City-approved homebuyer education class.

What types of Homes are Eligible?


  • Must be located within the City limits;
  • Must be a deed restricted affordable unit;
  • Must be on a permanent foundation;
  • Must be vacant for a minimum of three months or be owner-occupied prior to offer to purchase; and
  • Must be able to pass a housing and lead-based paint inspection. 

What are the Loan Terms?


Repayment of the loans for low and median income applicants is deferred for 30 years at 3% simple interest. Moderate and above moderate income applicants shall make monthly payments on a fully amortized 30 year, 3% interest loan. All loans must be repaid upon any of the following occurrences:
  • Home is sold or transferred;
  • Borrower ceases to occupy the home as their principal place of residence;
  • First mortgage loan becomes due and payable;
  • Home is refinanced with cash out; or
  • 30 years from the loan date.
The amount of assistance is:
  • $60,000 for applicants who reside and work in the City limits
  • $30,000 for applicants who reside or work in the City limits
  • $10,000 for all other applicants

How does the Application Process work?


Prospective homebuyers should start by getting pre-qualified for a first mortgage loan with a lender who is either familiar with or willing to work with the City’s Program. First mortgage loans must be fully amortized over a minimum of 30 years at a fixed interest rate.

Once pre-qualified, the homebuyer should start looking for homes within the price range recommended by lender, which should be determined taking into consideration the amount of the first mortgage loan, downpayment and our Program limits should you need additional assistance.

After the homebuyer has entered into an agreement to purchase, their lender must contact the Housing Division of the Community Development Department to begin the application process. The City will review the application and work with the lender to determine eligibility and complete the transaction.

For more information about the City’s Housing Programs, call (831) 768-3080.